Natural gas explained Natural gas prices

The price that consumers pay for natural gas has two main components, which include various taxes and fees: ¹

• Commodity cost—The cost of the natural gas itself, either as produced natural gas or as natural gas purchased at a market trading hub or under a contract by marketers and utilities.
• Transmission and distribution costs—The costs to move the natural gas by pipeline from where it is produced or stored to local natural gas distribution utilities and the cost to deliver it to consumers.

The shares of these two cost components vary according to natural gas market conditions.

Average natural gas prices in the United States

Retail prices for natural gas can vary greatly between states and cities. The differences are a result of six major factors:

• Distance from where natural gas is produced or stored
• Availability and capacity of transmission pipelines to move natural gas from producing areas, storage facilities, and trading hubs to distribution hubs
• Volumes and characteristics (such as timing and volatility) of consumer demand
• Costs of distribution, taxes, and other charges
• State regulations
• Availability of competing suppliers

How can residential natural gas consumers reduce their natural gas bills?

Consumers can reduce their natural gas bills in several ways:

• Shop for lower-priced natural gas if customer choice programs are available.
• Participate in a local natural gas utility's yearly budget plan (if available) to spread natural gas bills evenly throughout the year.
• Check natural gas space-heating equipment for efficient operation.
• Lower building thermostat settings, especially when buildings are unoccupied.
• Obtain an energy audit to identify other ways to reduce energy consumption.

Federal government programs provide grants to state government agencies for energy assistance to households that have limited budgets:

• Low Income Home Energy Assistance Program (LIHEAP) distributes funds to states to help low-income households pay heating bills.
• Weatherization Assistance Program provides grants to states, territories, and some Indian tribes to improve the energy efficiency of the homes of low-income families.

Additional state energy assistance and fuel fund programs may be available to help households pay energy bills during winter emergencies. Consumers can find out if they qualify for assistance in their states by contacting the state public utility or service commission or by contacting the local natural gas utility.

Last updated: December 21, 2023, with data available at the time of update.